Correlation Between Liontown Resources and IGO
Can any of the company-specific risk be diversified away by investing in both Liontown Resources and IGO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Liontown Resources and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liontown Resources Limited and IGO Limited, you can compare the effects of market volatilities on Liontown Resources and IGO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Liontown Resources with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontown Resources and IGO.
Diversification Opportunities for Liontown Resources and IGO
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Liontown and IGO is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Liontown Resources Limited and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Liontown Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Liontown Resources Limited are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of Liontown Resources i.e., Liontown Resources and IGO go up and down completely randomly.
Pair Corralation between Liontown Resources and IGO
Assuming the 90 days horizon Liontown Resources Limited is expected to generate 1.89 times more return on investment than IGO. However, Liontown Resources is 1.89 times more volatile than IGO Limited. It trades about 0.0 of its potential returns per unit of risk. IGO Limited is currently generating about -0.04 per unit of risk. If you would invest 134.00 in Liontown Resources Limited on August 29, 2024 and sell it today you would lose (84.00) from holding Liontown Resources Limited or give up 62.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontown Resources Limited vs. IGO Limited
Performance |
| Timeline |
| Liontown Resources |
| IGO Limited |
Liontown Resources and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontown Resources and IGO
The main advantage of trading using opposite Liontown Resources and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontown Resources position performs unexpectedly, IGO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IGO will offset losses from the drop in IGO's long position.| Liontown Resources vs. Sayona Mining Limited | Liontown Resources vs. Core Lithium | Liontown Resources vs. Critical Elements | Liontown Resources vs. South32 ADR |
| IGO vs. Rockridge Resources | IGO vs. Ameriwest Lithium | IGO vs. Osisko Metals Incorporated | IGO vs. Volt Lithium Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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